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A new practitioner’s perspective on Tax Court proceedings – lessons from a baptism of fire

27 October 2015   (0 Comments)
Posted by: Author: Darron West
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Author: Darron West (Advocate)

Darron West recounts his introduction to the Tax Court and shares practical insights from his experience

Despite considerable education in and exposure to tax law itself, I only recently enjoyed my introduction to proceedings in the Tax Court.  While the necessary procedural principles are set out in the Tax Court Rules promulgated under section 103 of the Tax Administration Act 28 of 2011, other practitioners might value some of the practical elements that I noted during my first experience.  Certainly, these notes cannot and do not presume to be exhaustive, and can serve only to highlight particular aspects.

The composition of the Tax Court

It can be quite intimidating entering the courtroom for the sitting of the Tax Court, particularly for the novice practitioner. While it might be unnecessary to do so, for the sake of completeness I note that the Tax Court comprises the judge of the High Court (sitting as the President of the Tax Court), and two assessors (one assessor from commerce, and the other from the accounting profession, although there are circumstances in which the commercial member must have certain specialist credentials).

Courtroom etiquette prevails, which necessarily means that everyone in the court stands when the judge and assessors enter the courtroom, bows deferentially to the bench, and is seated only after the members of the bench have been seated.

Since the President of the Tax Court is a judge of the High Court, the mode of address is "my Lord” or "my Lady”. The convention is not to refer to the judge as "you”; rather, the practitioner addressing the court should replace the use of "you” with "your Lordship” or "your Ladyship”. For example, instead of saying, "You will notice on page 57 of the dossier…”, you would rather say, "Your Lordship will notice on page 57 of the dossier…”.

Also, if referring to an assessor or assessors, one should demonstrate the appropriate respect by referring to "the learned assessor”.  For example, were an assessor to address a question to the practitioner, the respectful response might be, "Indeed, the learned assessor will find that reference on page 57 of the dossier…”. 

It is also important to realise that the role of the assessors is to assist the President of the Tax Court in evaluating the facts of the case. Only the President of the Tax Court may make any decision regarding a matter of law. It follows that if an exclusively legal point is being argued, the assessors will be justifiably silent in those proceedings. So, when arguing a legal point, you might enjoy the approving nods and smiles of the assessors, but you should not misinterpret these as signals of the success of your argument.

The formalities aside, one's case is based largely on the quality of the pleadings and so it is to this aspect that I now turn.

Pleadings

In a tax appeal, the substance of the respective cases are set out in SARS’s Statement of Grounds of Assessment, and the taxpayer's Statement of Grounds of Appeal.

That is not the end of it, however. In terms of rule 40 of the Tax Court Rules, at least 30 days before the hearing of the appeal, SARS must deliver a "dossier” to both the appellant taxpayer and the registrar of the Tax Court. The contents of this dossier include the above statements, but also include several other documents pertinent to the evidence in the proceedings. In essence, the dossier amounts to an audit trail of the official correspondence between SARS and the taxpayer (which includes inter alia the taxpayer's returns, SARS’s notice of objection, the taxpayer's notice of appeal and minutes of the pre-trial conference).

Two important observations follow after considering the contents of the dossier: first, the dossier does not necessarily contain all of the documentary evidence to be led in the appeal, and secondly, the importance of the pre-trial minutes cannot be underestimated.

As to the first point, there is scope for ample documentary evidence to be tabled before the Tax Court even though such evidence is not included in the dossier. Indeed, the number of such documents discovered as part of the trial preparation process often far exceeds the content of the dossier, and is included in the "trial bundle”. Hence, a practitioner (especially a new practitioner) should not misconstrue the dossier as the sum total of permissible documentary evidence. 

As to the second point, the purpose of a pre-trial conference is to at least attempt to limit the issues in dispute. Importantly, the Tax Court takes into account what transpires in such pre-trial conferences; the court may even make reference to the content of the pre-trial minute in regulating the proceedings or responding to the leading of evidence or argument. As such, the pre-trial conference should be conducted carefully and with due preparation. Also, the practitioner must be satisfied as to the content of the resulting minutes of that pre-trial conference.

A final word on pleadings: a taxpayer's Statement of Grounds of Appeal should be thorough but not long-winded, crisp but not vague. How one drafts the pleadings can dictate the passage of proceedings. The pleadings set the scope of the dispute and inform the nature and extent of the evidence that must be led and the argument that must follow. It is the first introduction that the court has to the respective cases being made by the taxpayer and SARS, and so it should be crafted suitably.

Preparedness

One cannot underestimate the necessity of thorough preparation for a tax appeal. There can be no excuse for a lack of preparation: the procedures and the documents that precede the appeal itself lend themselves to a state of considerable preparedness.

Hence, before entering the courtroom on the first day of the appeal, the practitioner must have read all of the documents that are tabled in the dossier and the trial bundle. Clearly, this must involve a full consideration of the opponent's documents too. A tax appeal is a trial and the practitioner must be entirely familiar with both the facts of the case and the applicable law before commencing.

Moreover, the practitioner must know precisely the nature of the evidence of witnesses that will be led. This means that the practitioner should already know precisely what the taxpayer's witnesses will say and the content of the documents to which they will refer. Thorough preparation also entails an anticipation of how one's own witness might be cross-examined, and the preparation of those witnesses accordingly before the appeal.

Preparedness might well be epitomised in the argument that concludes the appeal. To this end, some solid practical guidance (certainly to a new practitioner) is to present the court and one's opponents with a "pack of authorities” before commencing argument. The pack of authorities is a file or bundle of each of the cases being cited as precedent in support of the practitioner's case. To ensure a maximum of efficiency and a minimum of frustration, a pack of authorities should be indexed and paginated. In this way the practitioner can refer the court to particular pages and sections in the pack quickly and easily. Likewise, the court can refer the practitioner to the pack when interjecting during argument.

Clearly, the practitioner should be entirely familiar with the content of the authorities. One should ensure that one has read the entire case being cited: there can be no greater embarrassment than to cite a section or phrase in a case only to discover that one has cited a dissenting minority judgment or that the court was in fact taking issue with the phrase or section quoted.

Cases should also be read in an effort to distinguish them from the facts of the appeal, where necessary. This can be a very valuable technique, particularly where it might seem that the precedent is against the taxpayer. This can also be used to defuse the effect of authorities cited by one's opponents.

Preparedness might also be demonstrated by the practitioner's ability to engage directly with the court in argument without being buried behind pages of notes. A technique that I have observed which had considerable impact was the practice of "arguing off the authorities”. This technique amplifies the nature and extent of the practitioner's preparation for argument partly because the pack of authorities must be arranged in such a way as to present a theme or themes of argument logically and convincingly. When presenting argument, the practitioner follows the series of cases presented and highlights the operative parts to the court, drawing attention to any factual distinctions in the cases where necessary. Engaging the court in this way also means that the practitioner can observe and respond to the non-verbal reactions and expressions of the President and assessors, which can enable the practitioner to pause and address elements that might have caused apparent concern with the court, or hasten through issues that the court might appear to regard as self-explanatory or self-evident.

This anecdotal account of one practitioner's novel experience in the Tax Court neither hopes nor presumes to be definitive. However, if it helps practitioners in a similarly novel position to remedy some of the inevitable anxiety that precedes a court appearance, it will have served its purpose.

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This article first appeared on the September/October 2015 edition on Tax Talk.


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